A little more than a week ago, Space Exploration Technologies (SpaceX) (NASDAQ: SPCX) cemented its place in Wall Street history by raising $75 billion with its initial public offering (IPO) and debuting as one of the largest companies in the world.
After only three trading sessions (through June 16), Musk’s artificial intelligence (AI) and space economy titan commanded a $2.66 trillion valuation, placing it ahead of some of Wall Street’s most influential businesses, such as Amazon, Broadcom, and Musk’s other trillion-dollar company, Tesla
Several factors have positioned SpaceX stock for early success. But these early gains can quickly turn into a nightmare for retail investors once SpaceX’s unique lockup period takes effect. Structural index changes and a historically low float are boosting SpaceX’s share price Although investor euphoria for the SpaceX IPO has been off the charts, it’s the structural changes to major index inclusion and SpaceX’s historically low float that are primarily responsible for its stock rocketing out of the gate since June 12.
Long before SpaceX went public, several oversight committees amended the rules governing index inclusion. It began with Nasdaq (NASDAQ: NDAQ) Global Indexes refreshing the rules for inclusion in the growth-stock-dominated Nasdaq-100. Effective May 1, low float requirements for the Nasdaq-100 were waived, and companies that would rank among the 40 largest in the Nasdaq-100 are eligible for fast-entry inclusion after just 15 trading sessions.